Motorola stands to lose in iPhone's Verizon leap

(Crain's) — Apple Inc. is preparing to bring the iPhone to Verizon Wireless early next year, the Wall Street Journal reported Wednesday, a long-anticipated move that's likely to hurt Motorola Inc.'s comeback in the phone business.

Motorola's turnaround in smartphones over the past year has succeeded, in part, because Verizon, the nation's largest cell phone carrier, needed an answer to the iPhone, which has been sold exclusively by AT&T Inc.

Motorola, using Google's Android software, hit the market last November with the Droid, the first credible iPhone alternative. But a new iPhone likely will crowd out Motorola at Verizon, analysts say.

The timing is particularly bad for Motorola, which plans to split off its phone unit as a separate company in the first quarter.

Sanjay Jha, CEO of that business — called Motorola Mobility — has said he isn't worried about the iPhone, arguing that AT&T will be eager to adopt more Android phones once it loses exclusivity on iPhones.

"We compete with (Apple) today," Mr. Jha told analysts in August. "I don't think the economic value we bring to Verizon is any less important if the iPhone is there. I believe the Droid X is every bit as good as iPhone. (If the iPhone comes to Verizon) we have to compete. I believe we will innovate faster."

Motorola shares fell nearly 1% on Wednesday, to close at $8.56, following the Wall Street Journal's report. Verizon Communications Inc. stock was up 0.8% at $33.36.

On Tuesday, Motorola announced that AT&T would sell three new Android-based phones from Motorola. But none is at the high end — the $199 price point occupied by the Droid at Verizon or the iPhone at AT&T.

Apple and Verizon in the past have downplayed reports of plans to launch a new iPhone in early 2011. But analysts say that contract manufacturers have been building phones for the type of network technology used by Verizon.